2010 (10) TMI 1177 - SC - Indian Laws

Suit for specific performance - agreement of sale - refund of the earnest money - In present case, The appellant was the owner of the suit property. An agreement of sale was entered between defendant represented by her husband and attorney holder Kartar Singh, as vendor, and plaintiff represented by his attorney holder Paramjit Singh, as purchaser. The agreement of sale was signed by the attorney holder of the vendor and attorney holder of the purchaser and witnessed by Hari Singh (Property Dealer) and Balraj Singh. The agreement also contained an endorsement by Kartar Singh acknowledging the receipt of ₹ 10000/- as earnest money in addition to another sum of ₹ 1500/-.The plaintiff prayed for specific performance of the agreement of sale or in the alternative, if he was found not entitled to specific performance, then for a decree of recovery of ₹ 21,500/- (that is ₹ 11500/- paid to defendant s attorney holder and ₹ 10000/- as liquidated damages) with costs. HELD THAT - In this case, the evidence clearly showed that defendant s attorney holder Kartar Singh had entrusted the work of securing the clearances to the property dealer Balraj Singh, who was acting on behalf of plaintiff. This was within the knowledge of Paramjit Singh, who was the attorney holder of plaintiff at the relevant point of time. Balraj Singh also admitted in his evidence that he was to get the NOC and ULC clearance. Balraj Singh sent a telegram to Kartar Singh at the instance of plaintiff, asking him to come to Chandigarh on 7.6.1979 and execute the sale deed. Therefore, Balraj Singh had either secured the certificates necessary for the sale or had deliberately called Kartar Singh to come over to Chandigarh, even though the plaintiff was not ready and the clearances had not been secured, to create evidence that plaintiff was ready. In neither case, the defendant could be faulted. Be that as it may. The material on record shows that the respondent-plaintiff committed breach. Therefore, the earnest money stood forfeited and respondent is not entitled for refund of the earnest money.

Issues Involved:
1. Whether the suit has been filed by a duly authorized person?
2. Whether the suit is not maintainable in the present form?
3. Whether the suit for specific performance is not maintainable?
4. Whether the suit is hit by laches and delay? If so, its effect?
5. Whether the agreement dated 20.10.1978 has been rescinded and the suit is thus not maintainable?
6. Whether the plaintiff is estopped by his own act and conduct from filing the present suit?
7. Whether the time was the essence of the contract?
8. Whether the plaintiff was and is ready and willing to perform his part of the agreement? If not, its effect?
9. Whether the plaintiff is entitled to the specific performance and in alternative damages as claimed?
10. Whether the suit is barred in view of preliminary objection No.7 in the written statement?
11. Relief.

Issue-wise Detailed Analysis:

1. Whether the suit has been filed by a duly authorized person?
The trial court held that the suit was filed by a duly authorized person as the plaintiff had executed a power of attorney dated 1.3.1980 in favor of his brother Jagtar Singh Sangha. The evidence provided by Jagtar Singh Sangha and Balraj Singh confirmed the authorization, making the suit maintainable.

2. Whether the suit is not maintainable in the present form?
The defendant contended that the suit was not maintainable, but the trial court found it maintainable as the plaintiff's attorney holder had the necessary authorization to file the suit.

3. Whether the suit for specific performance is not maintainable?
The trial court decreed the suit for specific performance, holding that the plaintiff had proved his readiness and willingness to perform his part of the contract. However, the Supreme Court found that the plaintiff did not provide acceptable or valid evidence of readiness and willingness, leading to the dismissal of the suit.

4. Whether the suit is hit by laches and delay? If so, its effect?
The trial court held that the suit was not barred by time. The Supreme Court did not directly address this issue in its final decision as it focused more on the readiness and willingness of the plaintiff and the breach of contract.

5. Whether the agreement dated 20.10.1978 has been rescinded and the suit is thus not maintainable?
The trial court found that the agreement had not been rescinded. However, the Supreme Court found that the plaintiff was not ready and willing to perform the contract, which contributed to the dismissal of the suit.

6. Whether the plaintiff is estopped by his own act and conduct from filing the present suit?
The Supreme Court found that the plaintiff was not ready and willing to perform his part of the contract, which estopped him from seeking specific performance.

7. Whether the time was the essence of the contract?
The trial court held that time was not of the essence of the contract. The Supreme Court agreed that time was not of the essence but found that the plaintiff was not ready and willing to perform the contract even within the extended time.

8. Whether the plaintiff was and is ready and willing to perform his part of the agreement? If not, its effect?
The Supreme Court emphasized that the plaintiff must prove readiness and willingness to perform his part of the contract. The plaintiff did not enter the witness box, and his attorney holder, who did not have personal knowledge of the transaction, could not provide valid evidence. The Supreme Court held that there was no acceptable or valid evidence of the plaintiff's readiness and willingness, leading to the dismissal of the suit.

9. Whether the plaintiff is entitled to the specific performance and in alternative damages as claimed?
The trial court granted specific performance, but the Supreme Court found that the plaintiff was not entitled to specific performance due to the lack of valid evidence of readiness and willingness. The Supreme Court dismissed the suit and held that the earnest money stood forfeited.

10. Whether the suit is barred in view of preliminary objection No.7 in the written statement?
This issue was not directly addressed in the Supreme Court's final decision as the focus was on the readiness and willingness of the plaintiff and the breach of contract.

11. Relief.
The Supreme Court allowed the appeals, set aside the judgments of the lower courts, and dismissed the suit for specific performance. The earnest money stood forfeited, and the plaintiff was not entitled to any relief.

Conclusion:
The Supreme Court found that the plaintiff failed to provide valid evidence of readiness and willingness to perform his part of the contract, which is a condition precedent for granting specific performance. The evidence provided by the attorney holder and the property dealer was insufficient. Consequently, the suit for specific performance was dismissed, and the earnest money was forfeited.

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